CONSORTIUM TABLES R1BN FOR NAIL

Johannesburg – New Africa Investments Limited (Nail) yesterday said a consortium consisting of Safika Holdings, Mineworkers Investment Company (MIC), Tiso Capital Group and Investec Bank had made a bid for the company of R9 a Nail share, or about R1 billion. The deal could pave the way for the creation of a black-owned media empire spanning newspapers, outdoor media, radio and television. But the deal needs to clear a number of regulatory hurdles first. Nevertheless, Nail’s stock surged 60c to close at R7.85 and non-voting N shares rose R1.06 to R8.76 on news of the consortium’s offer. The offer represents a premium of 20 percent and 42 percent to the 30-day weighted average price of ordinary shares and low-voting N shares respectively. If successful, Investec would own 45 percent of Nail, Safika 25 percent and MIC and Tiso would share the remainder. The other 5 percent would comprise management and minority shareholders. Harold Bopalamo, a media analyst at Barnard Jacobs Mellet Securities, said this bid was probably an attempt to start a process of creating a powerful black-owned media company given the common shareholding and interest the three bidders had in the various media companies. He said the question mark was whether the Independent Communications Authority of SA would look past diversity issues and focus on empowerment as the likely winner. The MIC in 1996 successfully bid with Primedia Broadcasting for 94.7 Highveld Stereo and the MIC also owns a 25 percent stake of Primedia Outdoor. It is also invested in Hosken Consolidated Investments, which owns e.tv. Safika Holdings is already a significant shareholder in Nail through Phaphama Holdings. Tiso Capital, an empowerment firm led by chairman Fani Titi, is invested in Kagiso Media through Tiso Private Equity Fund. It also recently acquired a stake in Investec. Moss Ngoasheng, Safika’s chief executive, said black ownership at Nail would rise from 5 percent to 50 percent if this bid was successful. “Safika will join with its partners to maximise profits and unlock shareholder value in various ways.” Paul Nkuna, MIC’s chief executive, said: “We are supportive of consolidation in the media industry for viability. We don’t have a clear strategy on whether we will dispose [of] some of the assets at a later stage as this has to be decided by consensus of all consortium partners.” Saki Macozoma, Nail’s chief executive, decided with Nail’s board to initiate the move to dispose of its media assets after it failed to buy Kagiso Media and Johnnic Communication’s media assets. Macozoma has always expressed his frustration at the regulatory restrictions that prevented him from acquiring Kagiso Media, because Nail, despite having cash, lacked an empowerment profile. Nail’s major assets include 50 percent of Sowetan Sunday World, Sowetan, Leadership magazine, New Africa Books and a stake in radio stations Kfm, Kaya FM and Radio Jacaranda. It also has stakes in outdoor advertising and interests in television and film. The consortium said it would undertake a one-week due diligence of Nail before proceeding with an offer.

Source: Business Report – Gugulakhe Masango